Company Costs and Profits

The price of a Subway sub seems to vary by location, and also by the type of sub you buy! With 6” subs starting at $2.49 and footlong subs as high as $5.89 at this local Alberta restaurant, they are very affordable.  Subway also offers salads from $3.49 to $4.89 (Retrieved from http://www.snapfinger.com/Menus/Subway/Menu.aspx?SiteID=2575&category=Subs August 27, 2012).

At the individual restaurant level, some of Subway’s fixed costs would be rent/mortgage on the building, insurance, and the cost of certain supplies, such as cleaning supplies, of which the quantity needed, would be relatively consistent. Also, the salary for the owner and/or manager would be fixed as these need to be paid.

Some of their variable costs would include the cost of meat and produce, as they would need more at certain times of the year and during certain promotions. Utilities can vary during different months of the year, as well as price fluctuations for oil, etc. and so this would be a variable cost. Labour is also a variable cost as employees come and go, more staff is needed for busy times of the year (summer, holidays, etc.), increases in minimum wage and raises can all affect the cost.

Subway’s profits would be difficult to state on any individual restaurant for several reasons. That information is not necessarily accessible for the general public. It would vary greatly from store to store because the number of sales would vary. A location in a busy, highly populated area would show more profit than a location in a small town. However, the company’s profit as a whole is available for review. In 2011 “Subway generated revenue of $16.6 billion and added 24,000 jobs” (Retrieved from http://www.forbes.com/profile/fred-deluca/ August 27, 2012)